Agriculture sector lifted India’s economic growth to 9% in 2007-08 from the earlier projection of 8.7%. This will be the third year in a row, when the Indian economy grew at the rate of 9% and above. In 2005-06, the economy grew at 9.4% followed by 9.6% in 2006-07. It is now projected that economy will grow at a possible rate of 8.5% in 2008-09 (this is considering the world economy is showing signs of slow down and India is not spared to it).
However, in 2008-09, due to uncertainties in the global economy, the downward risks were much higher than in the previous year. Despite these odds, if India could sustain its agriculture growth, rejuvenate the manufacturing sector and maintain double digit growth in services sectors, its economy could very well grow at close to 9%.
The main source of confidence for 8.5% economic growth in 2008-09 is the huge investment that Indian economy is attracting presently.
In 2007-08, India attracted an investment of 37.5% of GDP— up by around 9.3 percentage point from the investment figure of 28.2% in 2003-04. With the improved productivity and rising investment, India can continue to grow at around 9% if all goes well.
In its revised estimate of national income for 2007-08, the Central Statistical Organization has mentioned that upward revision in the GDP growth rate is mainly on account of the revision made in the estimated production of agriculture crops by the Department of Agriculture and Cooperation.
The agricultural and allied sectors grew by 4.5% during 2007-08, compared to earlier estimates of 2.6%. However, the manufacturing sector witnessed some slowdown. The growth rate in the sector for 2007-08 lowered to 8.8% from the initial estimate of 9.4%.
At the same time, comparing the fourth quarter figures of 2007-08 to last fiscal, the economic growth dipped to 8.8% as compared to 9.7% in the corresponding period previous fiscal. The manufacturing sector has shown signs of slowing down. The fourth quarter figures for 2007-08 are much lower at 5.8% as compared to 12.8% in the January-March quarter of 2006-07.
There are clear concern over the slowdown in the manufacturing sector and government would take some corrective measures to revive the growth in all cases.
The other sectors, which performed poorly in 2007-08, are transport and communication, electricity, gas and water supply. While growth rate of the transport, communication, trade and hotels sector stood at 12% as against the earlier estimate of 12.1%, electricity and gas supply activities growth rate was a slower at 6.3% against 7.8% projected earlier. The construction sector grew marginally higher by 9.8% as compared to the earlier estimate of 9.6%.
Besides, the financial services sector, including insurance, real estate and other services also registered a slight increase at 11.8% as compared to 11.7% projected in the advance estimates. According to the revised estimates, the per capita income at current prices worked out to be Rs 33,299, showing an increase of 12.3%.